Chapter 11 Social Class and Consumer Behavior Ninth

Chapter Outline • • What Ss Social Class? The Measurement of Social Class Geodemographic Clustering The Affluent Consumer The Middle Class Consumer The Working Class Selected Consumer Behavior Applications of Social Class Copyright 2007 by Prentice Hall 11 - 2

Social Class Copyright 2007 by Prentice Hall The division of members of a society into a hierarchy of distinct status classes, so that members of each class have either higher or lower status than members of other classes. 11 - 3

Status Consumption • Consumers endeavor to increase their social standing through consumption • Very important for luxury goods • Is different from conspicuous consumption Copyright 2007 by Prentice Hall 11 - 4

Discussion Question • Why is status consumption important for some consumers? • How can

Social Class Is Hierarchal • Status is frequently thought of as the relative rankings

Table 11. 2 Percent Distribution of Five. Category Social-Class Measure SOCIAL CLASSES Upper-middle Middle Working Lower Total percentage Copyright 2007 by Prentice Hall PERCENTAGE 4. 3 13. 8 32. 3 16. 8 100. 0 11 - 7

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Social Class Measurement • Subjective Measures – individuals are asked to estimate their own social-class positions • Reputational Measures – informants make judgments concerning the social-class membership of others within the community • Objective Measures – individuals answer specific socioeconomic questions and then are categorized according to answers Copyright 2007 by Prentice Hall 11 - 9

Objective Measures • Single-variable indexes – – Occupation Education Income Other Variables Copyright 2007 by Prentice Hall • Composite-variable indexes – Index of Status Characteristics – Socioeconomic Status Score 11 - 10

Discussion Question • What are the advantages to a marketer using the objective method to measure social class? • When would the subjective or reputational method be preferred? Copyright 2007 by Prentice Hall 11 - 11

Index of Status Characteristics (ISC) Copyright 2007 by Prentice Hall A composite measure of social class that combines occupation, source of income (not amount), house type/dwelling area into a single weighted index of social class standing. 11 - 12

Socioeconomic Status Score (SES) Copyright 2007 by Prentice Hall A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing. 11 - 13

This reference to a plastic surgeon may be part of targeting to upperclass consumers.

Occupational ranking in terms of honesty and ethical standards Figure 11 -2 Copyright 2007

Table 11. 7 Typical Categories Used for Assessing Amount or Source of Income Amount Under $25, 000/year $25, 000 -$49, 999 $50, 000 -$74, 999 $75, 000 -$99, 999 $100, 000 -$124, 999 $125, 000 -$149, 999 $150, 000 -$174, 999 $175, 000 -$199, 999 $200, 000 and over Copyright 2007 by Prentice Hall Source Public welfare Private financial assistance Wages (hourly) Salary (yearly) Profits or fees Earned wealth Inherited wealth, interest, dividends, royalties 11 - 16

Geodemographic Clusters Copyright 2007 by Prentice Hall A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods) and demographic variables (e. g. , income, occupation) to identify target markets. 11 - 17

PRIZM (Potential Rating Index by Zip Market) Copyright 2007 by Prentice Hall A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed. 11 - 18

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The Affluent Consumer • Especially attractive target to marketers • Growing number of households can be classified as “mass affluent” with incomes of at least $75, 000 • Some researchers are defining affluent to include lifestyle and psychographic factors in addition to income • Have different medial habits than the general population Copyright 2007 by Prentice Hall 11 - 20

Most large banks offer “private banking” services to their most affluent customers. weblink Copyright

Three segments of affluent consumers’ average household expenditures Figure 11 -5 Copyright 2007 by

What Is the Middle Class? • The “middle” 50 percent of household incomes - households earning between $22, 500 and $80, 000 • Households made up of college-educated adults who use computers, and are involved in children’s education • Lower-middle to middle-middle based on income, education, and occupation (this view does NOT include upper-middle, which is considered affluent) Copyright 2007 by Prentice Hall 11 - 23

The Middle Class • There is evidence that the middle class is slowly disappearing in the U. S. • Growth of middle class in some Asian and Eastern European countries • Many companies offering luxury to the masses with near-luxury models and goods Copyright 2007 by Prentice Hall 11 - 24

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The Working Class? • Households earning $40, 000 or less control more than 30 percent of the total income in the U. S. • These consumers tend to be more brand loyal than wealthier consumers. Copyright 2007 by Prentice Hall 11 - 26

Discussion Question • What types of products are targeted to the working class? • What issues must marketers consider when targeting their ads to the working class? Copyright 2007 by Prentice Hall 11 - 27

The U. S. Census is an excellent source of data on different economic groups.

The Techno Class • Having competency with technology • Those without are referred to as “technologically underclassed” • Parents are seeking computer exposure for their children • Geeks now viewed as friendly and fun Copyright 2007 by Prentice Hall 11 - 29